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2017 – a year of unintended consequences

Alan Sherrard

Opinion & commentary

January 1, 2018

It has been another incredibly busy year for Bioenergy International. Canada and Finland, both forest countries celebrated 150 and 100 years as independent nations respectively. 2017 also marked a full year of 365/24/7 presence since the website launch in mid-October 2016. One general observation when going through the 1 300 plus news items published during 2017 is that it has been a year where the law of unintended consequences has been seemingly prominent in a broad biomass to energy context.

The law of unintended consequences is loosely defined as actions of people, policymakers and government always have effects that are unintended or at least unanticipated. One of the most striking examples 2017 was US President Trump’s announcement June 1 to withdraw the US from the Paris Agreement. Ironic as it may seem but President Trump’s America first climate (in)actions may well turn out to be the unintended push needed to put America first pulling everyone else along in its wake.

Though the US as a country may rescind on its leadership role, US cities and states have stepped up redoubling efforts. It is significant because as World Resources Institute (WRI) pointed out, if the states in the US that support the Paris Agreement were a country, they would be the 5th largest economy, 6th largest emitter and 12th most populous country.

Add to that commitments made by the twelve US members of C40, a network of the world’s megacities committed to addressing climate change along with the 141 cities throughout the US whose leadership are members of the Global Covenant of Mayors for Climate & Energy, an international alliance of cities and local governments with a shared long-term vision of promoting and supporting voluntary action to combat climate change and move to a low emission, resilient society.

Other regions and countries too are stepping up efforts including the world’s two most populated countries, China and India that together account for around 35 percent of the global population with circa 1.4 and 1.34 billion respectively. With population densities of 150 and 450 per square kilometre respectively, both countries know too well the challenges associated with providing for its citizens – water, food, shelter, sanitation, energy and employment in a resource-constrained world. Against this background, it is encouraging that China-EU assumes a climate leadership role.

However, judging from the ongoing debates on biomass for energy in Europe that continued in earnest during 2017, there would seem to be a disparity between EU’s lofty ambitions on the world stage and drafting congruent post-2020 renewable energy policy for its member states. The European Commission’s proposed recast of the Renewable Energy Directive (RED) post-2020, RED II announced in November 2016, is slowly being digested and regurgitated into adopted positions paved with caveats and clauses by various committees.

This year will see the next phase of the process with the European Parliament expected to agree on its negotiating mandate later this month followed by trialogue negotiations between the Commission, Council and Parliament.

For European producers of transportation biofuels, especially so-called first generation crop-based ones like fermented grain ethanol or oilseed-derived biodiesel, 2017 has been a roller-coaster ride around a minefield. European farmers along with biofuel producers suffer from this “systematic discrimination” policy that has little to do with scientific evidence on the climate and sustainability impacts of using a crop-based feedstock. This minefield also puts a dead-hand on investment will for advanced biofuels.

Argentine soybean oil-derived biodiesel, soy methyl ester (SME) also took a hit during 2017 as both the US and Europe slapped on anti-dumping and countervailing duties. Yet EU’s “systematic discrimination” of its own crop-based biofuels pales in comparison to the misdirected abhorrence of the globally traded vegetable oil that happens to be produced in countries outside of the EU, palm oil and its derivatives such as palm kernel oil (PKO) and palm fatty acid distillate (PFAD).

Unfortunately, it also appears to be the only thing that some European biofuel producers, environmental lobbyists and policymakers in the EU have in common. Leaving aside international trade implications and possible protectionist agendas, the moral high-ground call for a ban on the use of palm in biofuels in the EU highlights the hypocritical and discriminatory nature of this misdirected loathing. Mark well it is the use of palm oil and its derivatives in biofuels irrespective of if the feedstock fulfils sustainability criteria.

In short, the message is that is okay even commendable to eat your cookie, wash your hair and clean your clothes using products that contain sustainably certified palm oil but fuelling a diesel powered vehicle with PME (palm methyl-ester) biodiesel in southern Europe or an HVO biofuel derived from PFAD, a residue or by-product from palm oil production is a big “no no”. Suddenly palm oil, and palm kernel shells (PKS) for that matter is worse for the climate than the fossil fuel it is meant to replace, driving tropical deforestation, land grabbing and the demise of orangutans.

Needless to say, palm oil producer countries are up in arms, in particular, Indonesia and Malaysia, the world’s top two producers. For the latter 2017 marked its centennial as an industry which is on par with the Nordic countries and their forest estates.

As it happens HVO is considered an advanced biofuel in EU terminology. Furthermore, the HVO process is feedstock agnostic – indeed the name hydrotreated vegetable oil (HVO) is slightly misleading as any form of plant or animal fat, oil or grease (FOG) virgin or recovered (used cooking oil – UCO) can be used. For instance, crude tall oil (CTO), a residual of the pulp industry is also used as a feedstock to produce HVO though this has also been called into question on account of its alternative use value, a logical consequence of viewing PFAD as a product.

No doubt Indonesia, Malaysia and other producer countries will bump up domestic biodiesel blends and look to further developing cooking oil markets in China and India, the latter already the world’s largest palm oil import market, as a means to find alternative destinations for the 3.4 million tonnes of palm oil currently used in European biofuels whereas the PKS finds its way as fuel for Japanese biomass power projects.

Little wonder that Neste settled on Singapore for its planned HVO capacity expansion while both Total and Eni are scrambling for alternative feedstocks. Herein lies another potential unintended consequence – increased export of palm oil to the EU in the form of UCO, double counted and without demands on sustainability certification.

Biogas and biomethane, primarily produced from biowaste was also a prominent feature of 2017 – numerous projects in different countries and across agriculture, industry and municipal sectors. It ought not to be such a surprise as there is a clear circular economy link with clean, potable freshwater being such a constrained resource along with various nutrients and minerals.

On the subject of recycled commodities, China’s announced import ban in July on certain recovered materials including combustibles such as paper and plastics as of March 1, 2018, is bound to be felt if implemented especially for countries that rely on China for export of such materials. If unresolved, the knock-on effect will surely see an increase of recycled materials going for energy recovery rather than material recovery in regions that have the capacity, Sweden for instance.

If the European anti-palm oil message sounds familiar it is because it is – using wood products derived from a (certified) forest is fine but using woody biomass such as wood pellets especially those made from “whole trees” in a power station instead of coal is worse than using coal, according to one UK think-tank. Alongside liquid biofuels, it has been the subject of an ongoing detractor claim campaign on both sides of the Atlantic throughout 2017 and addressed with numerous evidence-based rebuttals and bioenergy days.

Finally while on the topic of wood pellets the end of 2017 saw the biggest news in terms of market movements, all in North America; Drax Biomass acquired the former German Pellets facility in Lousiana, the world’s third-largest pellet producer Canada-based Pinnacle Renewable Fuels revealed it was aiming for an IPO, the world’s largest industrial pellet producer US-based Enviva just got bigger whereas compatriot Rentech has thrown in the towel.

So what’s to look forward to in 2018? In short much more of the same but different. As of today, Sweden the country of origin for this publication has a new Climate Act, with a climate target to achieve zero net greenhouse gas (GHG) emissions by 2045. That is within 27 years and, statistically speaking, the Bioenergy International team should still be around to experience it.